Handbook of Decision Analysis

CHAPTER ONE

Introduction to Decision Analysis

GREGORY S. PARNELL and TERRY A. BRESNICK

Nothing is more difficult, and therefore more precious, than to be able to decide.

—Napoleon, “Maxims,” 1804

1.1 Introduction

1.2 Decision Analysis Is a Socio-Technical Process

1.3 Decision Analysis Applications

1.3.1 Oil and Gas Decision Analysis Success Story: Chevron

1.3.2 Pharmaceutical Decision Analysis Success Story: SmithKline Beecham

1.3.3 Military Decision Analysis Success Stories

1.4 Decision Analysis Practitioners and Professionals

1.4.1 Education and Training

1.4.2 Decision Analysis Professional Organizations

1.4.3 Problem Domain Professional Societies

1.4.4 Professional Service

1.5 Handbook Overview and Illustrative Examples

1.5.1 Roughneck North American Strategy (RNAS) (by Eric R. Johnson)

1.5.2 Geneptin Personalized Medicine for Breast Cancer (by Sean Xinghua Hu)

1.5.3 Data Center Location and IT Portfolio (by Gregory S. Parnell and Terry A. Bresnick)

1.6 Summary

Key Terms

References

1.1 Introduction

The consequences of our decisions directly affect our professional and personal lives. As Napoleon noted in our opening quote, decisions can be difficult, and making good decisions can be very valuable. Our focus is on professional decisions, but the same principles apply to our personal decisions.

We begin by defining a decision. Professor Ronald Howard of Stanford University defines a decision as an irrevocable allocation of resources (Howard, 1988). Consider the contracting process ...